By all accounts, BMW’s parts distribution warehouse in Ontario was one of the jewels of the company’s system.

Supplying dealer service departments throughout Southern California, Arizona and Nevada, it received gold medals from BMW for its efficiency and employed several of the top-ranked workers in the country. In the roughly 40 years its workers had been represented by the Teamsters union, there had never been a labor stoppage.

Times being what they are, when a Teamsters committee came to the plant in early June to open negotiations over a new contract to start Sept. 1, they thought they might be asked to accept minuscule wage increases and maybe some givebacks on health coverage.

They were stunned by what they heard instead: As of Aug. 31, the plant would be outsourced to an unidentified third-party logistics company and all but three of its 71 employees laid off.

The union contract will be terminated. Some of the employees might be offered jobs with the new operator, but there are no guarantees. And no one expects the new bosses will match the existing $25 hourly scale or the health benefits provided now.

Sure, it’s immoral to abandon your loyal American workers in search of cheap labor overseas. But the real problem with outsourcing, if you don’t think it through, is that it can wreck your business and cost you a bundle.

Case in point: Boeing Co. and its 787 Dreamliner.

The next-generation airliner is billions of dollars over budget and about three years late; the first paying passengers won’t be boarding until this fall, if then. Some of the delay stems from the plane’s advances in design, engineering and material, which made it harder to build. A two-month machinists strike in 2008 didn’t help.

But much of the blame belongs to the company’s quantum leap in farming out the design and manufacture of crucial components to suppliers around the nation and in foreign countries such as Italy, Sweden, China, and South Korea. Boeing’s dream was to save money. The reality is that it would have been cheaper to keep a lot of this work in-house.

The 787 has more foreign-made content — 30% — than any other Boeing plane, according to the Society of Professional Engineering Employees in Aerospace, the union representing Boeing engineers. That compares with just over 5% in the company’s workhorse 747 airliner.

Boeing’s goal, it seems, was to convert its storied aircraft factory near Seattle to a mere assembly plant, bolting together modules designed and produced elsewhere as though from kits.

The drawbacks of this approach emerged early. Some of the pieces manufactured by far-flung suppliers didn’t fit together. Some subcontractors couldn’t meet their output quotas, creating huge production logjams when critical parts weren’t available in the necessary sequence.

It doesn’t matter, though. Our corporate culture rewards immediate profits and doesn’t care about longterm viability. It doesn’t care about human capital and the things that make a company what it is. If they can save a few million in the short term, goose the executive bonuses for their thrifty leadership, they will do it. And they’ll move on to their next raise before the damage is obvious.

For the employees, though, the damage will be immediate and likely permanent:

Miguel Carpinteyro, 42, had 14 years with BMW and every expectation of retiring there. In the backyard of their home in the San Bernardino County community of Highland, he and his wife, Jerri, just finished building a pool, which is good therapy for their two autistic sons. A daughter has a heart condition requiring frequent medical visits.

The family put money aside for retirement through a 401(k), but they may have to tap that to live on, never mind paying their medical bills without employer-sponsored insurance. Their household budget, based on a BMW wage, can’t be sustained on much less. “We’ll probably end up losing the house,” Jerri told me.

Meanwhile, in the land of 10,000 Ironies, a state worker laid off in the shutdown wants less government:

The supporter was Rick Moore, 46, a state Department of Veterans Affairs worker who was furloughed Friday and sides with Republicans. Moore, who said he could weather a three- to four-week shutdown, said he hopes Republicans won’t give in because he believes state spending is out of control.
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“I think we have to be responsible,” Moore said. “I don’t have a Corvette or a four-wheeler. I’m responsible with my money, and I expect the state to be, too.”

That is a very sad story. The fact that it’s only one of several very similar stories doesn’t make it any better.

We have reached the point in our overall economic development where doing a good job will not give you security. That’s very dangerous, of course, and could very well lead to reduction in technological advancement and even a decline in the technological status quo. Historically, civilizations that underwent tech decline went through a very dark period and many disappeared altogether.

Not just “fuck the poor” but also “fuck the shareholders” and “fuck middle management” “fuck the thinkers” and of course “fuck everybody who doesn’t earn more than 100 mil a year”.

Pretty much the only people making money in Corporate America are the board of directors and no one else.

I’d imagine that if John Galt were real today, he’d be working for some mega corp, and all of his ideas would be patented by the corporation for the corporation and he’d be lucky if he’d still have that job in a year after they ship the engineering jobs overseas.

What republicans don’t get is that we are at a point where the US is extremely vulnerable right now. If another country wanted to attack us, and even invade, we would have no means to defend ourselves. We have no military here and no manufacturing to make what we would need to defend ourselves.

That’s very dangerous, of course, and could very well lead to reduction in technological advancement and even a decline in the technological status quo.

Don’t kid yourself Linda – this shit is going on all over the world but not everywhere – the Chinese government is watching the score and they are moving very carefully to consolidate things in their own country. They’ve got massive numbers of people and they know what happens when those people are idle and frustrated from lack of work.

I give them a couple of generations before they start making our mistakes. Maybe longer – just because it only took us a good two generations to piss away everything our grandparents and great-grandparents sweated blood and tears to build doesn’t mean that it has to be that way for them.

If another country wanted to attack us, and even invade, we would have no means to defend ourselves. We have no military here and no manufacturing to make what we would need to defend ourselves.

This is laughable on a couple of counts.

First of all, we still have plenty of military here. We spend more on military spending per capita than the next 12 countries on the list COMBINED. If someone tried to invade we’d mobilize and push them back fairly quickly.

But the bigger laugh is that anyone would WANT TO INVADE US. Why the fuck would anyone want to invade us? The traditional rationale for invading a foreign country is to get their land, their people, or their resources. You can buy our land dirt cheap right now, slavery is frowned upon so grabbing people isn’t a viable economic model anymore (and besides – if there’s one thing the world has a surplus of right now, it’s people), and we sell our resources pathetically cheap on the open market.

It would cost more to invade us than it would to just buy us outright.

If we were paying attention to peak oil, we would realize that everything needs to be more localized – food production, manufacturing, etc. – rather than globalized. I guess that sort of thinking is too long term for these assholes. I hope they have to pay the price at some point. The trouble is that all of us will have to pay along with them.

I think the issue is two-fold. (1) Companies are under constant pressure to not lag behind in efficiency.

If Airbus can sell a plane at a cheaper price than Boeing, than Boeing will have to do something to keep up with Airbus.

The same scenario goes for every industry.

If an architectural firm can outsource basic drafting at a fraction of the cost, they can bid more competitively than one that did everything in house and gain more business.

The real issue with outsourcing is coordinating the logistics of how to get things done. I think most corporate cultures have evolved to have certain functions under one roof, so basic time deadlines were met because you were meeting the person, who you’d piss off by not getting your work done on time in person on a regular basis.

That changes with outsourcing and most companies cannot find a talented enough manager in the outsourced segment to overcome this problem.

(2) Large investors put a lot of pressure on firms to have increased profits every quarter. If you aren’t growing, while your competitors are, you’re stock price will be devalued, which will effectively punish you for not keeping up with other firms in your industry.

I think there’s some merit to this approach, because if you are not able to keep up with others in your industry, your firm will eventually go out of business.

The real issue we face is how do we judge what the most effective method to keep up with the “Joneses” is?

I think, if more firms put a premium on their human capital and succeeded in beating out what others in their industry are doing, the trend to out-source might reverse and investments in developing nations would be to support growth in those nations.

P.S. The fact BMW has a plant in Canada means that some folks in Germany lost their jobs, because BMW effectively outsourced their production to Canada from Germany.

For years, BMW parts and service in the US was shit. Expensive shit, to be sure, but still shit. Over the last decade or so, They made real strides in making the experience better fo their customers, to the point where they were back on my own, personal short list for new rides. I’m going to take this as an indicator that parts and services is about to be flushed, so I’ll be removing the company from the list again.

I keep thinking that eventually Americans will march in the streets, all the way to the state capitols and DC; then Rick Moore or someone in my community comes along and snaps me back to reality. My community has 14 percent unemployment and voted overwhelmingly for Sharron Angle, a deranged Tea Partier, against Harry Reid. The whole damned county drinks the Kool-Aid every morning while watching Fox News.

This is about as short-sighted as you can get. The more money the head honchos take away from the workers, the fewer people there will be to buy their products. Buying stuff costs money and if people aren’t earning it then they can’t buy it. If people can’t buy it then the companies will go out of business.

End of story.

Our politicians no longer take the long view of things, they have sold out to the highest bidder to cash out now. They figure that solving these problems will not be their problem because when the shit hits the fan they will cash out and split with the payola. The white shirts at our corporations think the same way; they are going to do everything they can to rake in the bucks now and when things get bad they can just split and live off of the proceeds of their thievery.

I really don’t see how we stand a chance when our government has been bought off and our businesses refuse to keep the jobs here, pay a fair wage that you can live off of and still set aside some for a retirement nest egg. These companies have products they want us to buy or use, yet they refuse to pay us enough to do so.

It’s all about living in the moment and not worrying about the future. Earning a fair return on investment is passe, it’s all about what they can get NOW. Fuck everything else, all they care about is cashing out now at the expense of everyone later.

I don’t see this ending well and I don’t see any way of avoiding it when our ‘leaders’ refuse to be leaders. People are suffering now and it’s going to get a lot worse.

They don’t need to worry about retirement or medical bills. The ACA and Medicaid will rescue them soon. Besides, they’ll just get complacent and become cognitively impaired unless they work and stay active into their 70s or 80s.

Besides, they should stop bitching. How the fuck do they expect all of those good new jobs to be created if stockholders can’t realize a maximized ROI so they can plow the profits back into America?

@6.NonyNony –
I know that no country would want to invade the US. But that doesn’t stop the right wing from using that argument for purposes of creating fear and increased spending on all things military. But if they were called out on this argument, they could not explain how we would defend ourselves when our military is overseas and spent, and manufacturing has left the building and moved to your 3rd world country of choice.

Our politicians no longer take the long view of things, they have sold out to the highest bidder to cash out now. They figure that solving these problems will not be their problem because when the shit hits the fan they will cash out and split with the payola. The white shirts at our corporations think the same way; they are going to do everything they can to rake in the bucks now and when things get bad they can just split and live off of the proceeds of their thievery.

I’ve been saying the same thing for about 5 years now. It’s the source of most of my outrage (towards Republicans) and cynicism towards Dems. I hadn’t given up on the Dems until I saw Obama’s lack of diligence towards pursuing the criminals on Wall St that crashed the economy–and of course his hiring of one of the major idiots–Larry Summers–that pushed Gramm-Leech-Bilely.

“They” (As in Rethugs and Dems) may not be the same, but they are too goddamned much alike for the country to thrive.

The solution is going to be painful–collapse, long-term poverty for most followed by revolution of some sort.

But what the hey—maybe that “Liberty tree” is thirsting for a little tyrant blood.

That LA times article pissed me off. The time to be concerned about what was coming down the pike was 31 years ago, when Raygun fired all the air traffic controllers.

I mean, damn, welcome to the party and glad you’ve got the big picture…finally…but 31 years late to the party is too fucking late. There’s nothing left to be done at this point. Now you all you can do is just shake your head at the catastrophe that is America.

Couple things: There is no merit to the saying “you get what you pay for” any longer. Why pay the mark up on a car like that when it’s parts were made almost everywhere BUT Germany?

RE outsourcing: I have become a staunch advocate of buying local/Made in USA whenever possible, and with a bit of research it’s not that difficult to do. These corporations reap huge profits from their outsourcing, but that can only happen as long as Americans continue to feed their coffers. Need a new pair of jeans or some shirts? Try allusaclothing.com for example. A new frying pan? Buy a Lodge cast iron skillet! As far as cars go–that’s a pickle and if any of my fellow juicers can tell me how car manufacturers rank as far as Made in USA (parts and all) goes, I’d love to know.

I’ve been saying the same thing for about 5 years now. It’s the source of most of my outrage (towards Republicans) and cynicism towards Dems. I hadn’t given up on the Dems until I saw Obama’s lack of diligence towards pursuing the criminals on Wall St that crashed the economy—and of course his hiring of one of the major idiots—Larry Summers—that pushed Gramm-Leech-Bilely.

I’ve been saying the same thing for about 5 years now. It’s the source of most of my outrage (towards Republicans) and cynicism towards Dems. I hadn’t given up on the Dems until I saw Obama’s lack of diligence towards pursuing the criminals on Wall St that crashed the economy—and of course his hiring of one of the major idiots—Larry Summers—that pushed Gramm-Leech-Bilely.

well, yeah. that and the extension and expansion of the National Security State.

“They” (As in Rethugs and Dems) may not be the same, but they are too goddamned much alike for the country to thrive.

thrive? at this point i’d settle for a slower descent into second-world status if only because a glide would likely kill fewer of us than a crash. and that’s really the problem for these soon-to be-former employees, who crashed instead of gliding. not because they were laid off, but because outside of finance and some skilled trades there simply are no jobs that provide as well for the cost of living in the US. it’s not a sustainable society anyway either but that’s another story.

i can’t say as i understand it. maybe our financial betters are real social darwinists and think the not-wealthy deserve what they get. they’ve certainly done well in whittling back the US life expectancy.